Dear Unknown Friends:

Here is the third part of Eli Siegel’s 1970 lecture There Are Two Freedoms. He gave it early in his Goodbye Profit System series—lectures that explain, as nothing else does, what is happening to the economy of America and the world.

Now & History

In order to place the economic situation today—the situation of jobs, wages, hours of labor, buying, selling—we need to look at other matters in history. There have been, over the centuries, certain barbarities which were accepted year after year, and considered as much a part of life as breathing, but which are now looked on by civilized human beings as insupportable and horrific. Among these barbarisms was slavery, which not only existed in the American South but was thought of as necessary and right in ancient Greece and elsewhere.

Then, there was the long held barbaric assumption that women were unworthy of voting; also, that the only men who should vote were those with substantial property. That was law; it was seen as quite correct, and the very few who objected were viewed as weird and dangerous radicals. It was further taken for granted that only certain children should be educated—people with little money ought not learn to read and write. And of course it was taken for granted that poor children should work.

For centuries, the “divine right of kings” was accepted—how could there be another way of running a country? And until quite recently it was considered normal for parents to beat a child who didn’t behave to the parents’ liking.

These and other barbarities were simply felt to be “how things are.” But an objection to them grew. An objection deep and unarticulated in people became clearer, and they largely ended (in various places they continue to this day). Aesthetic Realism is the body of knowledge which explains their source, and the source of every cruelty. It’s contempt, the most hurtful thing in everyone: the feeling we’ll be more if we can make less of what is not ourselves.

So we come to present-day economics. Will economics impelled by the profit motive be seen as with those once-taken-for-granted barbarities I mentioned? For economics to be based, not on being useful, but on seeing people in terms of how much money one can wring from their labor and their needs—this is something people are accustomed to. Yet our being accustomed to something is not the same as the depths of ourselves approving of it.

What People Feel Today

In his Goodbye Profit System lectures, Mr. Siegel showed that not only is the profit motive unethical, but we’ve reached a time when its inefficiency has become more salient. Also, people feel with increasing keenness the falsity and insult of being used as an instrument for someone else’s financial aggrandizement. Men and women who can’t conceive of any other basis for an economy, nevertheless resent being seen in terms of profit. They resent the indignity, as well as the tangible bad effects a profit-driven economy has made for in their lives.

Some of those bad effects are documented in a group of short articles the New York Times published September 3, for Labor Day. There’s enough evidence in them to see that our economy is an inefficient, ailing thing. The overall headline was “Bringing Home the Leaner Bacon.”

People Can’t Retire

The first article, by Floyd Norris, is titled “She Works, Her Grandson Doesn’t.” Norris compares the present generation to the last, and notes that today “men in the prime working ages of 20 to 54 are less likely to have jobs.” Furthermore, “this generation of the elderly is less likely to retire than the last one.” That’s because, despite years of labor, the “elderly” don’t have the money to rest and enjoy life. As the title indicates, a grandmother of 79 is forced to earn money for her food, rent, and medicines, by perhaps standing in the supermarket checking out and bagging people’s purchases.

Ethics and efficiency have been seen as very different from each other. Aesthetic Realism says that ethics is the only real efficiency, yet often this fact is hard to see. An economy that compels people who worked hard all their lives to be poor in their old age, is unethical. Over the past three decades people have been more aware of the bad ethics of the profit motive, but its inefficiency is increasingly apparent too. Mr. Siegel wrote in the 1970s:

There will be no economic recovery in the world until economics itself, the making of money, the having of jobs, becomes ethical; is based on good will rather than on the ill will which has been predominant for centuries.

That is what those Labor Day 2006 articles are illustrating.

For instance, Norris mentions that today’s workers are “less likely [than last generation’s] to work for companies that make things, and more likely to work for companies that provide services.” This means manufacturing in the United States has diminished; it has done so starkly. America was once uncontestably the world’s preeminent manufacturing nation. But today we rely largely on manufacturing elsewhere for basics, like most clothes, steel, appliances. The reason why is that the motive for business is not usefulness to people but profit for a few individuals-so if a steel mill can’t make some few people rich, they will shut it down.

Debt & Lessened Wages

A short article by Steven Greenhouse, titled “Borrowers We Be,” is about a matter I wrote on recently—the huge household debt of Americans:

Last year, for the first time since the Depression, the personal savings rate for the nation fell below zero, meaning that Americans are spending more than they are earning.

That is really a staggering fact: it means most Americans find they can’t live decently on what they earn! It’s a fact that certainly shows the inefficiency of the present economy, and is replete with human pain.

An article with the satiric headline “Here, Take Back Some of My Pay, It’s Too Much” is by Louis Uchitelle. He tells us that, in vast numbers,

American workers have agreed to accept, however reluctantly, a cut in their wages or benefits or both in recent years.

The reason for these cuts is something I’ve described in previous issues: we’ve reached the point when economics based on large profits for a few persons is no longer compatible with decent compensation for the people who do the work. And Americans need to see this clearly, so they can make up their minds which should be sacrificed: their ability to live well and have their families live well, or profits for wealthy individuals.

Mary Williams Walsh has an article titled “The Flush Are Working for the Public.” She tells us that the “overall compensation” received by people who work for state and local governments is “46 percent higher…than for private-sector” employees. Compensation includes benefits and wages, and “government employees [do] better on both counts.” The reason is in keeping with what I just explained: if you work for the government, no individuals are using your labor to enrich themselves—there are no private profits involved.

The Answer Is Aesthetics

Aesthetic Realism explains that what will have economics fare well is the same as what will have the life of a person fare well. In both instances, the answer is aesthetics: we need to put together the opposites that are made one in every true instance of art. In the present lecture Mr. Siegel shows that economics has to make a one of Freedom and Exactitude or Justice. It has to put together the One and the Many-our assertion of our own individuality, and fairness to all those other individualities who aren’t ourselves.

Aesthetic economics has not existed anywhere yet—but it’s the one thing that will satisfy. It’s what Americans now, in their worry, debt, resentment, and hope, are demanding. Our economy needs what a person who stands as much for America as anyone, Walt Whitman, was after. He wrote in Song of Myself, “I celebrate myself and sing myself” and also “In all people I see myself, none more and not one a barley-corn less.”

—Ellen Reiss, Aesthetic Realism
Chairman of Education

People’s Lives Are in It All

By Eli Siegel

I said I would discuss the document Mel Darringford brought here last week, an article in a brokerage firm’s newsletter. In it, the broker mentions some “questions facing the investor”:

Is U.S. business in the early stages of a prolonged recession, or are we witnessing a period of transition toward a less inflationary economy?

We are now in the midst of a time which will make clear to the American people that the profit motive in industry will not work. The profit motive can be said never to have worked. What it did was keep things going. But bring out through economics, through the tangible, what is best in people, in enough of them—it never did that. The profit motive has always been a failure. But you have to have a perspective to see whether something is a failure. The profit system has never, never, but never worked.

I’ll try to justify these statements, and occasionally I’ll have to use aesthetic criteria.

Are There Other Rights?

Will capital continue to earn a return comparable to that which it has earned in the past?

The return on investment has never been codified. If people could get a 50 percent return on an investment—you buy a yacht for $10,000 and sell it for $15,000—that would be wonderful. Who would be against it? But most persons are satisfied with a mere eight or nine percent. The old phrase is: a man has a right to a return on his investment. Yes, he has a right. But it’s not the only right in the world.

In the third paragraph the writer says:

Inflation will continue, although it will likely be at lower rates than in recent months.

That is one of the mysteries of the world: the relation of exchange value to what has been called real value; that is, the relation of money and what it stands for. If there is more money standing for a product or commodity, there’s inflation. If there’s less money, then there’s something else. How to see whether it’s inflation or not is a mystery. But we always say the prices are inflated, never the product. I hope to deal with the fate of the German mark in the 1920s, when you had to give 8,000 marks for a little volume of Schiller. But it was the same Schiller.

While deplorable in that it [inflation] results in a slow erosion of the dollar—

In the currency market, there are other coins or monies that are questioning the American dollar. At one time the American dollar was the standard. The Canadian dollar is getting very uppity. That the dollar has gone down is a sign of something happening to American production.

Production & Wages

Long term growth in the gross national product in real terms is basic.

Quite right. But the writer of this forgets what has been described as a basic contradiction of capitalism. It is said that if a country is very productive but doesn’t pay labor enough, a certain product will not have enough buyers. You cannot do a good job fighting a union and keeping a laborer’s wages down but expect him to be a buyer of that which is produced in a lavishly producing economy. What happens is, and it’s happened pretty often: the system produces a great deal but, lo, there are not enough buyers. So then the system has to reconsider, and about that time—something like this happened in 1929—about that time we have deflation. An economy does not produce for sport; it produces to sell. This means there must be buyers, and these buyers must get their money somewhere. The writer does not deal with that.

So People Are in Debt

How can unlimited production, or ever so rich production, assure itself of a market? It happens that if you pay your doctor bills, you may not have so much left over for a bicycle. And we have the situation now: there is more money, but there still is some hindrance in buying everything. That is why the loan system is still going on.

There are these three things, among others: there is how much is produced; the situation of labor producing it; and the market for what is produced, which includes labor and occasionally includes a foreign land. For example, I hear that Persona injector blades are very popular in Iceland . (I don’t know where I got that.)

What’s the Purpose of an Economy?

The relation of capital, labor, production, market, has always been an inefficient thing in the history of the profit system. I don’t care if everything was humming. It’s always been inefficient, because if you say the purpose is to produce so many things, all right; but if the purpose of an economy, as it should be, is to have man at his best, that’s something else—or America at its best.

Long term growth in the gross national product in real terms is basic. This is founded upon such fundamentals as population increase…

Free enterprise, knowing that babies are being born all the time, sees customers-in-advance. Malthus felt that the only way to solve the problem of poverty was to see that the lower classes don’t breed so much, which would mean they should read hymn books and keep away from each other. The awareness of population explosion began with him. In the meantime, while there is a population explosion, you do see every infant as a possible customer.

A Higher Standard of Living

This is founded upon such fundamentals as population increase, constant striving for higher standards of living…

It used to be said against social equality that if you had it, who would do all the dirty work? Who would clean out the lavatories? You couldn’t answer, because you had no names at hand. If there is “constant striving for higher standards of living,” it would mean that the plain laborer, the person who used to be called the ditch digger, also is looking for a higher standard. Occasionally Con Edison has to have some more wires, or AT&T; you have to dig for them somehow, and it’s not only with machinery, so there’s the person who was called a ditch digger. As soon as he gets higher standards, he thinks of either going to college himself or sending his children to college—and what’s going to happen to all the plain labor? One solution is that you have to give it a much higher price, as has somewhat occurred.

If someone is striving for a higher standard of living yet it pays you to pay him as little as possible, there’s a contradiction somewhere, because he’s not going to get that higher standard of living if your idea of what you should pay him is going to win.

But I must say this: the writer of the article I’m reading from doesn’t understand labor. He knows there’s such a thing. Every company, including every company listed in the stock market, is made up of persons working; it also depends on the persons who buy the product. If it’s a big company, it has these four main aspects: there are the persons working there; there’s the executive staff; there is the person buying the product; and there are outside investors.

All That Labor Has Gotten

The writer mentions a “solution of social problems through a broader distribution of income.” That phrase, “broader distribution of income,” and others, like “social justice,” and “a more adequate recompense for the producer,” are phrases that people often used to hide their desire not to give an adequate recompense. Because all that labor has gotten, it got through its own bad manners. Even Samuel Gompers at the beginning, when he was in the cigar union, even George Meany, had to use bad manners. The company sometimes on Christmas would give a bonus, but there was no wage increase that amounted to anything unless the union became unmannerly.

Interest rate problems should prove to be temporary…

The right to have interest because of the use of your capital is a large question; but it has to be seen in relation to what is producing something?, what is production?

This broker feels, as most people feel, that the profit system is going through some jolt, it’s having a bad time, but it’s essentially sound. It’s like a car: it may show a difficulty in getting to a place, but it will go to a filling station and get some gas and a few repairs and it will go again. That may be so, but that’s not what I’m saying. The profit system will never work again, and I’ll try to explain what I mean. Things are being produced without it, though not under the best terms. The position of Aesthetic Realism is: Aesthetics in industry, in the fullest sense of the word.